Naira Reaches 10-Month High Following FATF Delisting

The Nigerian Naira continued its steady recovery against the US dollar over the past week, recording mild appreciation in both the official and parallel markets.

On the Nigerian Foreign Exchange Market (NFEM), the currency traded at approximately N1,441.5/$, while parallel market rates hovered between N1,435/$ and N1,450/$.

These figures reflect a 1.7% gain compared to the previous month and a strong 13.5% year-on-year appreciation. Overall, the Naira has strengthened by about 6.76% in the first 11 months of 2025, partially reversing the steep depreciation experienced between 2023 and 2024.

Analysts describe the Naira’s short-term outlook as stable to mildly bullish, with potential for further gains if supportive economic conditions continue.

Strong Fundamentals Support Naira’s Outlook

Sentiment in the foreign exchange market improved sharply following Nigeria’s removal from the Financial Action Task Force (FATF) grey list, which tracks countries with deficiencies in preventing money laundering and terrorist financing.

The development boosted investor confidence, lifted foreign reserves, and pushed the Naira to a 10-month high of N1,444.4/$ at the official window on Wednesday. Increased dollar liquidity—partly driven by more holders selling off their stash—also contributed to the currency’s performance.

Market optimism has been further reinforced by ongoing financial sector reforms championed by the Central Bank of Nigeria (CBN). Analysts expect the grey-list exit to reduce payment obstacles for regional businesses and pave the way for higher investment inflows, particularly from international financial institutions and private-sector stakeholders.

FATF noted that jurisdictions removed from the list had addressed strategic gaps in curbing illicit financial flows and strengthening regulatory oversight. Four countries—Mozambique, Burkina Faso, Nigeria, and South Africa—have now met delisting requirements, improving their standing in global capital markets.

CBN Interventions and Global Trends Boost Naira

CBN’s recent policy actions have helped narrow the gap between official and parallel FX markets. Liquidity injections and a more accommodative monetary environment have reduced speculative pressures and enhanced investor confidence.

Nigeria is also benefiting from resilient global crude oil prices, which support the country’s foreign exchange earnings. In addition, diaspora remittances and foreign portfolio inflows are rising amid improving global risk sentiment.

However, analysts caution that some downside risks remain. Inflation—currently about 20.1%, down from 21.9% in July—still poses a threat to consumer purchasing power and could elevate demand for the US dollar. Persistent FX demand from imports, overseas tuition, and debt obligations may also create supply mismatches.

External factors, such as the strength of the US dollar and volatility in other major currencies—particularly the British pound, currently trading at N1,890–N2,030 (GBP/NGN)—could exert additional pressure on the Naira in the coming months.